The mid-career switch: Financial planning for a career change

Last year, Australians changed jobs at the highest rate in a decade, accelerating the trend of the mid-career switch: experienced professionals taking a new career path in their late 30s or even beyond. 

If you’re unhappy in your chosen field, there are many good reasons to consider making the leap, even if it means a salary reduction. However, there are also financial considerations. 

Here we discuss some of the steps to consider when deciding whether a career change is right for you and your finances.  

#1 Understand why you want to make the change

The first step is to reflect on why you want a career change to make sure it’s the right move for you. Sometimes, it may just be time for a new employer. An unhappy environment can make us dislike our work, so it’s worth considering whether other factors at play may be more easily addressed. 

Identifying what you’re moving away from and what you hope to achieve in your new career path is crucial. 

Career counsellors can be helpful in stepping you through your strengths, gaps and suitability for a future role.

Engaging with professionals already in your field of interest can provide a realistic preview of what to expect. Will some of the issues in your current career also be in the next one? Is the grass greener on the other side? 

Having a simple coffee catch-up with others in the new field can help you identify the skills and training you may need, and the best ways of getting your foot in the door. You can then research the upfront costs, potential time away from paid work while you learn, job outlook and understand salary expectations once you’re qualified. 

#2 Explore how you’ll fund the change 

While following our passions is a noble cause, we still have life expenses that won’t stop, from mortgage repayments to grocery bills. So, the next step is understanding how to deal with any periods of changed income. 

This step involves knowing where your money is going at a very detailed level. You can’t make informed decisions if you don’t know how much you’re spending. Upon doing this exercise, many people find areas where changes can be made, many that may not impact lifestyle much – or even at all.  

It’s also worth exploring options to remain in your current role, even part time, while you study or build new skills for the new role to maintain a steady income for as long as possible.

A word of caution: as part of this process, it’s essential to be realistic about the time it will take to make the transition. Underestimating the timeline is a common pitfall – and it can be a costly one. 

#3 Build a roadmap to your career transition   

Preparation is key when it comes to finances and life goals. You may want to make the switch ASAP, but it’s worth building a pathway to the transition with a timeline and financial milestones to ensure you get there in a sustainable way. 

Some key activities to consider include: 

• Building up a savings buffer to cover course fees and any potential gaps in income.
• Understanding the potential impact on your retirement, as you may find that you will need to work longer as a result. (This doesn’t have to be a deal breaker, but it’s a factor you should weigh up.) 
• Reviewing your loans and talking to a mortgage broker. Refinancing is usually much easier while you have a solid work history, so it’s worth thinking ahead.
• Assessing your investment strategy. For example, you may want to consider investing in less volatile options for any periods where you are not earning an income. 
• Revisiting personal insurance policies with an expert adviser to ensure they will continue to meet your needs and provide adequate protection throughout the transition and the right level of cover. You may be able to pause premiums or reduce cover closer to future earnings to save money in the transition.  
• Engaging in open and ongoing discussions with your partner about the implications of reduced earnings to ensure you are on the same page about what it will mean for your lifestyle and goals.

#4 Talk to your financial adviser (early and often!) 

If you’re thinking about making a mid-career switch, talk to your Apt adviser early in the planning stages. We can help you consider how you would adapt your financial plans to suit changing circumstances, taking both a short- and long-term view so you can live for today while planning for tomorrow. 

#5 Go for it! 

Aligning your career with your passion and purpose can have significant value and lead to a happier and more meaningful life. So, a mid-career switch, while challenging, can be a deeply rewarding process.

It’s important to put in the groundwork, but with the right financial planning and preparation, it’s absolutely possible to navigate the path to a new career with confidence and security.

Thinking about making a career change? Reach out to Apt Wealth Partners about how we can help you make the right moves.

General Advice warning

The information provided in this blog does not constitute financial product advice or a recommendation to purchase a particular product. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners Pty Ltd is not a registered Tax Agent. You should consider your individual situation and seek tax advice from a registered tax agent before making any decision based on the content of this document. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.